Trump Towers Discharges Into Chicago River Not an “Occurrence”

The Appellate Court of Illinois for the First District, in an opinion by Justice Reyes and applying Illinois law, affirmed a finding that insurers of Chicago’s Trump International Hotel & Tower (“Trump Hotel & Tower”) had no duty to defend or indemnify the hotel in an underlying lawsuit alleging the hotel’s improper operation of a cooling water intake and discharge system. The Appellate Court held the absence of an “occurrence” under the policies prevented the insurers obligation to defend or indemnify Trump Hotel & Tower. 

In 2018, the state of Illinois, at the request of the Illinois EPA, sued Trump Hotel & Tower for intaking and discharging water from and into the Chicago River for its HVAC system without a permit, in violation of the Illinois EPA. After Trump Hotel & Tower was found liable for violating environmental laws, Continental Casualty Company (“Continental”) and two other insurers filed a declaratory judgment action against the insured, arguing they did not have a duty to defend or indemnify Trump Hotel & Tower in the underlying environmental lawsuit. Specifically, Continental argued there was no alleged “occurrence” under the policies, as “occurrence” was defined as an “accident.” Continental contended that the intentional discharge into the Chicago River without a permit could not be considered an “accident.” 

The Appellate Court agreed with Continental and held Trump Hotel & Tower’s intentional operation of its water intake/discharge system without a valid permit did not constitute an occurrence. The Appellate Court reasoned that the conduct at issue was Trump Hotel & Tower’s operation of the system in general and not the ultimate environmental impact of the operation. Since the issue in the underlying case revolved around Trump Hotel & Tower’s compliance with statutory and regulatory requirements, the Appellate Court determined the alleged conduct could not constitute an “occurrence” under the terms of the insurance policies. Ultimately, the Appellate Court affirmed the prior rulings on the insurers’ declaratory judgment motions. Contl. Cas. Co. v. 401 N. Wabash Venture, LLC, 2023 IL App (1st) 221625 (Aug. 30, 2023).